Overpayments of CTB and HB.

The Regulations we will cover will be

  • Housing Benefit Regulations, 2006, SI 213,regs 99 to 107 and Schedule 9,Part 7
  • Housing Benefit (Persons who have attained the qualifying age for state pension credit) Regulations 2006,SI 214,regs 80 to 88 and Schedule 8, Part 7
  • The Council Tax Benefit Regulations, 2006, SI 215,regs 82 to 90 and Schedule 8, part 7
  • The Council Tax Benefit (Persons who have attained the qualifying age for state pension credit) Regulations 2006, SI 216,regs 67 to 75 and Schedule 7,Part 7

What is an overpayment ?

Any amount of CTB/HB paid to which there is no entitlement.

Overpayments of CTB are called “Excess Benefit” in the regulations but they are commonly referred to as “Overpayments”

For example

Ross receives HB of £10.00 per week from Monday 11/01/10. In March, he tells us about a change in his circumstances which reduces his HB to £8.00 per week with effect from Monday 15/02/10.

As Ross has been paid up until 14 March 2008 he has been overpaid by £2.00 per week from 15 Feb to 14 March (4 weeks).

Total overpayment = £8.00.

How do Overpayments occur ?

  • Claimant makes a mistake
  • Local Authority makes a mistake
  • Job Centre Plus, Pension Service or HM Revenue and Customs make a mistake
  • Claimant fails to report a change of circumstance on time.

Note: whilst Job Centre Plus should tell us that IS/JSA(IB) has ended, the claimant must still tell us directly. Also, people on Pension Credit should report changes in income/capital to the Pension Service and not to us.

  • Claimant reports a change on time but the Local Authority fails to action it on time.
  • Claimant or Landlord commits fraud
  • A payment irregularity – for example, fraudulently cashing a cheque.

How can we reduce overpayments?

  • Deal with changes in circumstances promptly
  • Process claims and changes accurately- calc your claim/change. Check the result before OK-ing
  • Always remind claimants and landlords of their duty to report changes promptly
  • Suspend payment if you do not have all the information to process a change
  • Make it easy for customers to report changes to us
  • Consider underlying entitlement

How are Overpayments calculated ?

Compare the amount paid to the amount that should have been paid (which may be nothing), for the period of the overpayment, which is the start date of the change to the date they have been paid to.

Previous example (Weekly payer)

Ross receives HB of £10.00 per week from Monday 7/01/08. In March, he tells us about a change in his circumstances which reduces his HB to £8.00 per week with effect from Monday 11/02/08.

As Ross has been paid up until 9 March 2008 he has been overpaid by £2.00 per week from 11 Feb to 9 March (4 weeks).

Total overpayment = £8.00.

For Example (Monthly Payer)

Ross gets paid £100 per month from 7 Jan ‘08. In April he tells us about a change which reduces his entitlement to £80 per month wef 11 Feb ‘08. He has already been paid up to 31 March ’08.

As Ross has been paid up until 31 March 08 he has been overpaid by £20.00 per month from 11 Feb to 31 March (Full month of March and 19 days of February).

£20.00 + (£20.00 divided by 29 (days in Feb 08) multiplied by 19 days) = £33.10.

Council Tax Benefit overpayments are calculated on a daily basis.

There are special rules where capital has been incorrectly declared, called “diminution of capital”.

Overpayment Recovery

There are now 2 questions that we need to ask

  1. Is the overpayment recoverable ?
  1. Should we recover it ?

Is the overpayment recoverable ?

All overpayments are recoverable except

Those caused by official error (LA, Job Centre Plus, Pension Service, HM Revenue and Customs) and

Where the claimant, or a person acting on their behalf, or the payee, could not, at the time of receipt of the payment or any notice relating to that payment reasonably have been expected to realise that it was an overpayment.

For example

We forget to input Daniel’s work pension when we process his HB. This is spotted a few weeks later when Daniel reports a change. It is the Local Authority’s error but the computer letter (notification) to Daniel gives the income used, so he could reasonably have been expected to realise that he was being overpaid. Therefore this overpayment is recoverable.

Rachel gets short-term lower Incapacity Benefit. We incorrectly award her the disability premium. When we realise this several weeks later, Rachel has been overpaid. The overpayment is Local Authority error but this could be not recoverable, as a customer cannot be expected to know the rules on premiums.

Should we recover it ?

If we decide the overpayment is not recoverable, we should not recover it.

If it is recoverable, we should decide if we will recover it.

Generally speaking we will try to recover almost all recoverable overpayments but recovery is discretionary and we should take into account such factors as:

  • State of health
  • Cause of overpayment
  • Financial ability to repay the overpayment
  • Any other relevant matter

NB: No time limit on OP recovery

Who should we recover from ?

  • The claimant
  • The payee, including the landlord

Generally speaking, we should recover the overpayment from whoever caused it. Where the overpayment was caused by the claimant failing to tell us of a material change (for example, they started work), the overpayment should be recovered from the claimant, not the landlord. If it is caused by the claimant changing address, recover from the landlord, if paid to the landlord.

  • The partner if both claimant and partner were members of the same household, both at the time of the overpayment and when recovery is made.

We cannot recover from the landlord if

The landlord has notified the LA in writing that they suspect there has been an overpayment and

It appears to the LA that there are grounds for instituting proceedings against any person for an offence under Section 111A or 112(1) of the Administration Act (dishonest or false representations for obtaining benefit) or there has been deliberate failure to report a relevant change of circumstances.

How do we recover overpayments ?

Consider underlying entitlement first then

  • From any outstanding benefit due
  • From an ongoing HB claim
  • From HB paid to the landlord even if HB relates to other tenants (if the overpayment was paid to that landlord)
  • By sending a bill
  • From certain Social Security benefits
  • Overpayments of CTB are applied to the Council Tax Account

Please note however, that you cannot recover an overpayment of HB from CTB or an overpayment of CTB from HB

Also, you cannot recover overpayments of CTB/HB from Discretionary Housing Payments (and vice versa). In this case you should raise a bill.

Weekly overpayment recovery rate from ongoing HB claims

Maximum recovery rate is £9.90 per week or £13.20 per week if the overpayment is fraudulent. ( April 2010)

The maximum recovery rate is increased by half of any standard earned income disregard or half of lower permitted earnings disregardor half of any voluntary or charitable payment disregardor half of £10 disregard of war pensions.

For example

Jennifer is a single parent who works. Her HB entitlement is £50.00 per week but we are recovering an overpayment from herHB at the maximum rate of £22.40 per week. This is £9.90 plus £12.50 (half of £25.00 single parent earned income disregard). We now only pay her £27.60 per week.

If we are recovering an overpayment from ongoing HB we must pay the claimant at least £0.50 per week.
For example
Overpayment is £100.
HB is £8.00
Standard weekly recovery rate on I world is £9.90
Payment will be £0.50 per week and the recovery rate will be £7.50 per week.
IS/JSA(IB)/ESA(IR)/PC:GC
It is our policy to set a recovery rate of £3.30, without the claimant asking for this. If this is done after the run that created the o/p, advise the claimant. Underlying entitlement

When calculating the amount of the overpayment, deduct from the original gross overpayment any underlying entitlement that existed during the period of the overpayment.

For example:Monica comes off Job Seekers Allowance (Income Based) and starts work. She does not tell us at the time – nor do Job Centre Plus. We cancel her HB and an overpayment of £500 is created. She submits payslips for the period of the overpayment and we calculate her HB for the period of the overpayment is £200. This reduces the real overpayment to £300.

Points to note are that

  • It is not backdating so the claimant does not have to prove good cause if the information is provided within one month of us asking for it. However if they take more than one month it is still not backdating but they do need to show good cause for not responding to our request for information within one month.
  • The one-month rule about beneficial changes does not apply.
  • Even if the period goes back more than 3/6 months, we should apply underlying entitlement
  • The claimant does not have to ask for it. If we have the information to reassess the overpayment, we should do so. If we do not have the information, we should make one request for it, but not normally more than one request.
  • If the claimant does not respond, the gross overpayment stays as it is.
  • If it turns out that the claimant is due CTB/HB, this amount must not be paid as the claimant is not entitled to it, as they did not report changes in circumstance at the time. The overpayment would be reduced accordingly probably to zero. If the correct codes are applied to I World then I World will do this automatically.
  • UE does not apply to HB overpayments caused by change of address- update such o/ps to NNO (no netting off), except in private HB where HB at new address paid to same person-do not set NNO in such o/ps.

Overpayment notifications

Notifications to the person affected must include enough information so that they can check the decision.

A person affected is someone whose rights, duties or obligations are affected by a decision:

  • The claimant
  • The Local Authority
  • The landlord, in the case of a decision on HB payments to the landlord
  • A person from whom the Local Authority decides that an overpayment of HB is recoverable.

The following things must be included in the notification where an overpayment is recoverable.

  • The fact that there is a recoverable overpayment
  • The reason why there is a recoverable overpayment
  • The amount of the recoverable overpayment
  • How the amount was calculated
  • The period the recoverable overpayment relates to (that is, the dates)
  • How the overpayment will be recovered
  • Where recovery is to be made from ongoing HB, that fact and the amount of the deduction
  • Where an overpayment is recoverable from a landlord and recovered from other tenants’ HB paid to the landlord, identification of who the overpaid tenant is and who the tenants are from whose HB recovery is being made
  • The method by which the Local Authority intends to recover overpaid CTB

Subsidy: Classification of overpayments

Subsidy means the amount of money the Local Authority gets back from the Department for Work and Pensions (DWP). Subsidy is an incentive to LAs to minimise overpayments and to recover them- we get the subsidy back from DWP and any amounts that we recover from the claimant/landlord.

For example:

Claimant overpayment of £100. If we recover it in full we also receive 40% subsidy = £100 plus £40 = £140. If we don’t recover it then we only receive the 40%.

Claimant/Fraud/Other 40%

Local Authority New arrangement wef 1/4/04

  • We get 100% subsidy on all LA o/ps if the amount of LA o/ps are 0.48% or less than the amount of correct payments
  • We get 40% if the amount is between 0.48 and 0.54%
  • We get no subsidy if the amount is greater than 0.55%

From 01/04/09, LA administrative delay if o/p caused by our delay in processing change and the delay is outwith our control, for example, staff shortages.Recoverable- not LA error.

Pension Service/HM Revenue & Customs/

Job Centre Plus100% (if overpayment not rec’d)

0% (if recovered)

Technical error: rent rebate/

CTB granted in advance of

entitlement0%

Duplicate rent allowance payment

where original lost/stolen/

not received and later found to

have been cashed 25%

Subsidy 2006/2007:

Rent Rebate

1) Total LA error o/p

£168,252.00

2) Total clmt/other/fraud o/p (40% subsidy)

£1,456,781.00

Rent Allowance

1) Total LA error o/p

£326,393.00

2) Total clmt/other/fraud o/p (40% subsidy)

£2,745,337.00

Council Tax Benefit

1) Total LA error o/p

£164,081.00

2) Total clmt/other/fraud o/p (40% subsidy)

£1,508,815.00

LA o/p error

1) Total expenditure attracting 100% subsidy

£152,649,370.00

2) Total LA error

£658,726.00

3) Lower threshold = 1) x 0.48%

£732,717.00

4) Upper threshold = 1) x 0.54%

£824,307.00

5) 100% subsidy on all LA error if 2) does not exceed 3)

£658,726.00

6) 40% subsidy on all LA error if 2) is greater than 3) but does not exceed 4)

Not Applicable

Overpayments can be classified in more than one category

Ruth is getting HB of £100 per week. She gets paid HB 4 weekly at the end of the period the HB relates to.

01/09/07 wage rise

31/10/07 Ruth reports wage rise to LA (paid to 28/10/07)

08/12/07 LA reduces HB to £90 per week from Monday 03/09/07

At this point Ruth has been paid HB up to Sunday 28/11/07

Total overpayment is £10 x 12 wks = £120 (3/9/07 to 28/11/07)

Classification of overpayment:

3/9/07 to 28/10/07 (day before next payment after LA notified) = £80.00 (claimant error)

29/10/07 to 28/11/07 = £40.00 (LA error)

Subsidy claimed by LA:

£80 X 40% = £32

Amount claimed on LA error of £40.00 depends on total LA o/p for caseload.

Generally speaking, LA error/admin delay starts the Monday after the date the LA is notified of the change. But in private sector HB:payment in arrears claims, if a payment is issued at the unchanged rate of HB after LA has received notification, the start of that payment period will be the start of LA error. For example, a claimant is paid monthly in arrears. They notify LA of a change on 17/01/07, effective Monday 25/09/06. The January HB payment is issued at the end of January at the unaltered rate. On 08/02/07, LA applies the change. LA error starts 01/01/07.

If we had processed the change when we received it or suspended the payment until we had the full information we could have reduced the LA error/admin delay.

Disputes/Appeals

A person affected can appeal about/dispute any matter concerning a recoverable overpayment, but not about the LA exercising its discretion to recover an overpayment

They have one month from the date they are notified, to appeal/dispute the decision. This can be extended by a further 12 months

Dispute means ask LA to reconsider its decision

Appeal means ask LA for case to be heard by the Tribunals Service

If claimant makes representation that the weekly recovery rate £9.90is too much, you can set a lower recovery rate

Our procedures

Most of our procedures relate to the computer but there are some points to note. Record all decisions concerning an overpayment. When it is created, complete the Comino overpayment decision case report.

  • Generally speaking we will seek to recover all overpayments but you should consider the 2 questions – is it recoverable and should we recover it ?
  • Generally speaking, we will seek to recover the overpayment from the person who caused the overpayment, but if they dispute this or appeal and the decision is changed, record the decision
  • If you decide to recover HB from an ongoing claim at less than the maximum rate £9.90, for example, because the claimant has requested it due to hardship, record this decision.
  • Generally speaking, consider underlying entitlement first then recover the overpayment from any outstanding entitlement due to be paid.
  • If CTB, apply the o/p to the CTAX account
  • Then from the landlord’s aggregate payment (if appropriate)
  • Then from ongoing HB entitlement at the maximum recovery rate (or less if the claimant makes representation)
  • Then by raising a bill
  • Then from other state benefits.

DWP Overpayments Guide

There is an overpayments guide on DWP CTB/HB website.

LLD – Housing Associations/Co-ops on fast track scheme

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Viewpoint

West Granton

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